Presentation of corporate governance 2017 The object of corporate - PDF document

Presentation of corporate governance 2017 The object of corporate governance for Norwegian Property is to secure a clear and appropriate division of roles between shareholders, the board of directors and the executive management over and above legal requirements. Implementation and reporting on corporate governance The board wishes to contribute through good corporate governance to a good trust-based relationship between Norwegian Property and the company’s shareholders, the capital market, and other stakeholders. Norwegian Property has drawn up overall principles for corporate governance, which are described here and are available at http://www.npro.no/formal-documents. The board has also prepared a set of principles and guidelines specifying various guidelines, instructions and policies intended to ensure compliance with good corporate governance in practice. The board’s presentation of the way Norwegian Property has implemented the applicable Norwegian code of practice for corporate governance of 30 October 2014 is set out below. The code is available on the website of the Norwegian Corporate Governance Board (NCGB) at www.nues.no. Reference is made to this presentation in the directors’ report for 2017, and it is available on the company’s website. The presentation covers each section of the code, and possible variances from the code are specified under the relevant section. The group’s values base defines important principles for corporate governance. This base rests on four core values, which form the foundation for building a positive corporate culture. COLLABORATIVE • We will be open and inclusive • We will be generous and make ourselves available • We will have a personal commitment COURAGEOUS • We will think innovatively • We will be ambitious • We will challenge established truths PROACTIVE • We will always seek to overcome problems before they arise • We will seek and see new opportunities • We will present new ideas

ATTENTIVE • We will create and retain relationships • We will do what we promise The board has formulated guidelines for ethics and corporate social responsibility (CSR) in accordance with the group’s values base. Norwegian Property’s guidelines are available at www.npro.no. The core of the CSR guidelines is the company’s responsibility for the people, society and environment influenced by its operations, and deal among other considerations with human rights, anti-corruption, labour conditions, health and safety, discrimination and environmental aspects. Business Norwegian Property’s articles of association are available o n its website. Enshrined in article 3, the company’s business purpose states: “The company operates in management, acquisitions, sales and development of commercial real estate, including participation in other companies as well as businesses which are re lated to such”. Within the framework of its articles, the company has presented goals and strategies for its business on page 16 in the directors’ report. Equity and dividends Equity Consolidated equity at 31 December 2017 totalled NOK 7 654.8 million. The equity ratio at the same date was 49.1 per cent. The board regards the equity ratio as satisfactory in relation to the group’s goals, strategy and risk profile. To secure good financial freedom of action, the company has a long-term ambition that the relationship between net interest-bearing debt and gross fair value of the properties will be in the range of 45- 55 per cent. The company’s financial flexibility is assessed at any given time in relation to the company’s goals, strategy and risk profile. At 31 December 2017, the relationship between net interest-bearing debt and gross fair value was 44.7 per cent. Dividend Pursuant to the company’s dividend policy, a goal for Norwegian Property is to pay competitive quarterly dividends. Its long-term aim is to pay a dividend of 30-50 per cent of its profit after tax payable, but before fair-value adjustments. The dividend can be higher in times of good cash flow or p roperty sales. An independent assessment of the group’s financial position and prospects will be carried out before a dividend is determined.

The dividend policy is also described in note 22 to the consolidated financial statements in this annual report and in the investor relations section of the company’s website. Board mandates The AGM of 6 April 2017 mandated the board to increase the company’s share capital by up to NOK 27 420 000, corresponding to just under 10 per cent of the company’s share capit al when the mandate was awarded. The board mandate is motivated by the desire to have the opportunity to issue new shares in return for cash payments and/or as settlement for property transactions. This mandate had not been utilised at 31 December 2017. In addition, the board was mandated to raise convertible loans totalling NOK 750 000 000. This was because the board wanted to have the opportunity to issue new shares in combination with additional debt, partly in order to optimise the financing structure in Norwegian Property ASA. This mandate had not been utilised at 31 December 2017. It was also resolved that the board’s overall use of mandates to issue new shares awarded to the board by the AGM should not exceed 10 per cent of the share capital. The board is also mandated to purchase the company’s own shares up to a total nominal value of NOK 27 420 000. Norwegian Property made no purchases of its own shares during 2017. The board was mandated to determine the payment of dividend on the basis of the company’s financial statements for 2016. This decision was motivated by the desire to give the board the opportunity to pay dividend on a rolling basis if it considered this to be appropriate in light of the company’s position. Norwegian Property paid div idends during 2017 of NOK 0.12 per share in February, NOK 0.07 per share in May, NOK 0.07 per share in July and NOK 0.08 per share in November. All board mandates remain valid until the company’s AGM in 2018, but in any event not beyond 30 June 2018. No provisions in the articles of association authorise the board to decide that the company will buy back or issue its own shares or primary capital certificates. Equal treatment of shareholders and transactions with close associates Norwegian Property has only one share class, and all shares have equal rights in the company. Its articles of association impose no voting restrictions. No share issues were conducted by Norwegian Property in 2017. Pursuant to the code, the reasons for waiving the pre-emptive right of existing shareholders must be published in a stock exchange announcement in connection with a capital increase. The board will endeavour to comply with this point should such circumstances arise in the future.

Norwegian Property did not purchase or sell any of its own shares in 2017. Possible future transactions will be conducted on the stock exchange or in another manner at the stock market price. The board and the executive management are concerned to ensure equal treatment of all the company’s shareholders and that transactions with close associates (related parties) take place on an arm’s length basis. Note 23 to the consolidated financial statements details transactions with close associates (related parties). Financial relationships related to the directors and executive personnel are described in notes 14 and 19. Guidelines on conflicts of interest are included in the instructions for the company’s board of directors, and ensure that directors inform the board if they have a significant direct or indirect interest in an agreement being entered into by the company. To avoid unintentional conflicts of interest, the company has drawn up an overview which identifies the various roles of its directors, the offices they hold and so forth. This overview is updated as and when required and in the event of changes in the board’s composition. Pursuant to the company’s ethical guidelines, no employee must work on matters in which they have a personal interest or where such an interest could be perceived to exist. Freely negotiated shares Shares in Norwegian Property are freely tradable on the Oslo Stock Exchange. No restrictions on the negotiability of the shares are imposed by the articles of association. The board considers good liquidity of the share to be important for Norwegian Property to be regarded as an attractive investment, and the company works actively to attract interest from the investor market. General meetings Notice, registration and participation The board makes provision for as many as possible of its shareholders to exercise their rights by attending the general meeting. The 2018 AGM is scheduled to take place on 19 April. The company’s financial calendar is published as a stock exchange announcement and in the investor relation s section of the company’s website. Notice of the general meeting, with comprehensive documentation including the recommendations of the nomination committee, is made available to shareholders on the company’s website no later than 21 days before a meeting takes place. Shareholders who want the attachments sent by post can apply to the company for this to be done. The documentation must contain all the information required for the shareholders to form a view on every item to be considered. Shareholders wishing to attend the general meeting must indicate this intention by the specified deadline. The deadline for registering attendance is set as close to the meeting as possible, normally two days in advance.